US Federal Appeals Court considers patentability of business methods

The matter of patentability of business methods (and, correspondingly, computer programs) has come before the US Federal Appeals Court in the case of In re: Bilski.

The invention relates to a “method for managing the consumption-risk costs of a commodity sold by a commodity provider”.  A patent application for the invention was filed initially in April 1997, and both the patent Examiner and the Appeals Board of the US Patent and Trademark Office (USPTO) determined that the invention is unpatentable, among other reasons, because it represents a mental process and is not tied to a physical transformation or machine.

The question, therefore, is now before the 12-judge panel of the US Federal Appeals Court.  The case has generated much interest, with prominent software and Internet companies watching closely.  Many companies have applied to be listed as a friend-of-the-court, including IBM, Microsoft, Dell and Yahoo.  Individuals and companies alike stand to lose if there are no clear rules regulating what is patentable and what isn’t.

According to the USPTO, the patent application was rejected because the process amounted to patenting an “abstract idea” which is something that the Supreme Court has previously ruled is not worthy of a patent.  In considering this, the Appeals Court even took time analysing the meaning of the word “abstract”.

Interested parties continue to speculate and make recommendations regarding the outcome of the case, but the Appeals Court is not expected to rule on the matter for at least six months.

James Davies
Senior Associate
Adams & Adams and Adams
JAMES-D@adamsadams.co.za